Solyndra, after given a controversial $535 million federal loan guarantee went bust casting a shadow over the solar industry. As in many, the debate is weighting more over political issues. Two questions are at the center of the debate. Whether the loan given was optimal stimulus policy and whether it was a sound investment in the beginning.
Trying to do both optimal stimulus policy and sound investment turned out to be tricky. An optimal stimulus policy has to be as quick as possible to be effective and the money, without any need for productive use, should be transferred to the public to create income thus spending. Meanwhile, whether the investor is a private or public one, a due diligence for a good investment requires time and experience.
Whatever your answer to both of these issues, the rise of the solar industry is irrelevant to them. As in every competitive industry, there are winners and losers in this industry too. The pace of innovation is so quick and the amounts invested throughout the world so vast that competitive pressure weighs heavily on solar firms. China, Japan and South Korea are investing unprecedented amounts thorough cheap loans to their domestic solar industry.
In 2008 and 2009, the average price of solar panels decreased by half. So far, the improvements in the production of solar panels have been incremental resulting from the use of economies of scale. Nevertheless, breakthroughs could happen as new techniques are applied. Using nanotechnology or using more efficient semiconductors are possible ways for significant improvement.
Growth opportunities are in sunny places including many American states and southern European countries. In California, solar is already cheaper than peak electricity prices. In emerging economies such as China, India, Middle East and Africa where sunny places and an increasing demand for electricity coexist, the prospect of solar is bright. Especially in rural parts of these countries which lack efficient transmission lines, many rooftops are waiting to be covered by solar panels.
The solar industry has a rosy picture in the future for consumers around the globe if not for every company.